HITOX
CORPORATION
of America
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
The Annual Meeting of Shareholders of Hitox Corporation of America, a
Delaware corporation, will be held at the Omni Marina Hotel, 707 N.
Shoreline, Corpus Christi, Texas in the Riviera I Room, (entrance level),
on Tuesday, May 19, 1998, at 9:00 a.m., local time, for the following
purposes:
1. To elect a board of six (6) directors.
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for 1998 by the Board of Directors.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has established the close of business on March
25, 1998, as the record date for determining shareholders entitled to
notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Elizabeth K. Morgan, Secretary
April 15, 1998
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting,
we urge you to mark, sign and date the
enclosed proxy and return it promptly
in the enclosed envelope.
<PAGE>
<PAGE>
HITOX CORPORATION OF AMERICA
722 Burleson Street
Post Office Box 2544
Corpus Christi, Texas 78403
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement and accompanying proxy is furnished by Hitox
Corporation of America (hereinafter the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used
at the Annual Meeting of Stockholders to be held at 9:00 a.m. (local time)
on May 19, 1998, at the Omni Marina Hotel, 707 N. Shoreline, Corpus
Christi, Texas, and at any adjournment thereof. This Proxy Statement and
the enclosed proxy were mailed on or about April 15, 1998.
The Company will bear the cost of soliciting the proxies. In addition
to being solicited by mail, proxies may be solicited by personal interview,
telephone and telegram by directors, officers and employees of the Company.
The Company expects to reimburse brokers or other persons for their
reasonable out-of-pocket expenses in forwarding proxy material to the
beneficial owner.
Any proxy may be revoked at any time prior to its exercise by written
notice to the Secretary of the Company or by submission of another proxy
having a later date. No notice of revocation or later dated proxy,
however, will be effective until received by the Company at or prior to the
Annual Meeting. Mere attendance at the meeting will not of itself revoke
the proxy. Properly executed proxies in the accompanying form, received in
due time and not previously revoked, will be voted at the Annual Meeting or
any adjournment thereof as specified therein by the person giving the
proxy, but if no specification is made, the shares represented by the proxy
will be voted in favor of the proposals shown thereon.
Only stockholders of record at the close of business on March 25,
1998, (the "Record Date") will be entitled to notice of and to vote at the
Annual Meeting. There were outstanding at the close of business on the
Record Date 4,657,487 shares of the Company's Common Stock, each of which
is entitled to vote in person or by proxy. The Common Stock is the only
class of capital stock outstanding and entitled to vote at the Annual
Meeting. The holders of a majority of the total shares of Common Stock
issued and outstanding and entitled to vote at the meeting, whether present
in person or represented by proxy, will constitute a quorum for the
transaction of business at the Meeting. A quorum being present at the
Annual Meeting, election of the director nominees requires the affirmative
vote of a majority of the shares present, in person or by proxy, at the
Meeting, and approval of Proposal 2 requires the affirmative vote of at
least a majority of the shares present, in person or by proxy, at the
Meeting. Neither the Company's Certificate of Incorporation nor its By-
Laws provide for cumulative voting rights. Abstentions and broker non-
votes are each counted to determine the number of shares present at the
meeting, and thus, are counted in establishing a quorum. Broker non-votes
will not be counted in determining the number of shares voted for or
against the proposed matters, and therefore will not affect the outcome of
the vote. Abstentions on a particular item (other than the election of
<PAGE> 1
<PAGE>
directors) will be counted as present and entitled to vote for purposes of
any item on which the abstention is noted, thus having the effect of a "no"
vote as to that proposal. With regard to the election of directors, votes
may be cast in favor of or withheld from each nominee; votes that are
withheld will be excluded entirely from the vote and will have no effect.
The Annual Report to Stockholders covering the Company's fiscal year
ended December 31, 1997 including audited financial statements, is enclosed
herewith, but does not form any part of the material for solicitation of
proxies.
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to those
persons known to the Company who, as of December 31, 1997, own or may be
deemed to own beneficially more than five percent of the Common Stock of
the Company.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned (1) of Class
------------------- ---------------------- --------
Megamin Ventures Sdn Bhd 1,353,000(2) 29.1%
41 Jalan Sultan Azlan Shah Utara
31400 Ipoh, Perak
Malaysia
The Clark Estates, Inc. 1,159,780(3) 24.9%
One Rockefeller Plaza
31st Floor
New York, NY 10020
Pecks Management Partners, Ltd. 1,211,111(4) 22.9%
One Rockefeller Plaza
New York, NY 10020
(See following footnotes)
(l) Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended.
(2) Megamin Ventures Sdn Bhd is an investment holding corporation
organized under the laws of Malaysia which provides management
services. Mr. Keng Kay Lim, a director of the Company, is the
controlling shareholder of Megamin Ventures Sdn Bhd and exercises sole
voting power over these shares, and therefore may be deemed to be the
beneficial owner.
<PAGE> 2
<PAGE>
(3) Information is based on a Schedule 13G filed with the SEC dated
January 22, 1997 and other information provided by The Clark Estates,
Inc. The Clark Estates, Inc. provides administrative and investment
services to a number of Clark family accounts which beneficially own
an aggregate of 1,159,780 shares, including Jane Forbes Clark who owns
459,602 shares and Anne L. Peretz who owns 448,825 shares. Kevin S.
Moore, Senior Vice President of The Clark Estates, Inc., has been
granted powers of attorney to exercise voting and investment power as
to 1,159,780 shares. The Clark Estates, Inc. and Mr. Moore have
shared voting and investment power as to 1,159,780 shares; Jane Forbes
Clark has shared voting and investment power as to 459,602 shares;
Anne L. Peretz has shared voting and investment power as to 448,825
shares.
(4) Consists of shares issuable pursuant to outstanding warrants held by
NAP & Co., Northman & Co. and Fuelship & Co. exercisable at $4.50 per
share with respect to 1,111,111 shares and at $2.50 per share with
respect to 100,000 shares. NAP & Co., Northman & Co., and Fuelship &
Co., of which Pecks Management Partners, Ltd. serves as investment
manager, may be deemed to be a "group" as that term is used in Section
13d-3 of the Securities Exchange Act of 1934, as amended. NAP & Co.
owns warrants to purchase 847,778 shares, Northman & Co. owns warrants
to purchase 199,107 shares, and Fuelship & Co. owns warrants to
purchase 164,226 shares of the 1,211,111 shares. Because Pecks
Management Partners, Ltd. serves as investment manager, it may be
deemed to be a beneficial owner of such shares, although it disclaims
such beneficial ownership. The address of Pecks Management Partners,
Ltd. is One Rockefeller Plaza, New York, New York 10020.
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the Board of Directors shall
consist of not less than six (6). At the Annual Meeting, six (6) directors
are to be elected to the Board of Directors, each to hold office until the
1999 Annual Meeting or until his successor is elected and qualifies. The
persons named as proxies in the enclosed proxy card, who have been
designated by the Board of Directors, unless otherwise instructed in such
proxy, intend to vote the shares represented by the proxy for the election
of the nominees listed in the table below for the office of director of the
Company. The nominees have been proposed by the Board of Directors. If
any such nominee should become unavailable for election, the persons named
as proxies intend to vote for such substitute nominee as may be proposed by
the Board of Directors, unless otherwise instructed in such proxy. No
circumstances are now known, however, that would prevent any of the
nominees from serving and the nominees have agreed to serve if elected.
<PAGE> 3
<PAGE>
The information appearing below with respect to the business
experience during the past five years of each nominee for director,
directorships held and age has been furnished by each director as of
February 25, 1998. All of the nominees are presently directors of the
Company.
Director
Name and Principal Occupation Age Since
----------------------------- --- --------
ROBERT J. CRESCI 54 1992
Managing Director, Pecks Management Partners, Ltd.
A director of Bridgeport Machines, Inc.; Sepracor, Inc.;
Arcadia Financial, Ltd.; EIS International, Inc.;
Meris Laboratories, Inc.; Educational Medical Inc.;
Film Roman, Inc.; Garnet Resources Corporation
Source Media, Inc.; Candlewood Hotel Co., Inc.
Castle Dental Centers, Inc.; HarCor Energy, Inc.
and several private companies.
WILLIAM B. HAYES 72 1990
Chairman of the Board since September 1994.
Consultant and Investor.
KENG KAY LIM 61 1997
Chairman, Megamin Ventures Sdn Bhd; Deputy Chairman
Cum Group Managing Director Mega First Corporation
Berhad; and Managing Director Rock Chemical
Industries (M) Berhad with both companies listed on the
Kuala Lumpur Stock Exchange.
KEVIN S. MOORE 43 1992
Senior Vice President, The Clark Estates, Inc.
A director of Ducommun, Inc., and
Snake Eyes Golf Clubs, Inc.
MICHAEL A. NICOLAIS 72 1982
Senior Managing Director, Carret & Co., Inc.
A director of Basin Exploration Co.
BERNARD A. PAULSON 69 1992
Chief Executive Officer, Inspection Group, Inc.
Retired President of Koch Refining Company
with over 40 years experience with other
companies in the refining and petrochemical
industries, including Kerr-McGee Corporation.
<PAGE> 4
<PAGE>
Mr. Cresci was nominated to serve as a director pursuant to a Note
Purchase Agreement, dated June 15, 1992, between the Company and purchasers
of the Company's subordinated notes ("Notes"), NAP & Co., Northman & Co.
and Fuelship & Co. (the "Noteholders"). Pursuant to that agreement, the
Company has agreed to use its best efforts to include the Noteholders'
designee, Mr. Cresci, on the slate of nominees proposed by the Company for
election to the Board of Directors, and to solicit proxies in favor of such
designee, together with the other nominees in the Company-sponsored slate.
Such obligation will continue so long as the Noteholders hold at least 25%
of shares of common stock issuable under warrants issued to the Noteholders
(the "Warrant Stock"), or warrants to purchase at least 25% of the Warrant
Stock.
Directors' Attendance
During the year ended December 31, 1997, there were four meetings of
the Board of Directors of the Company. No incumbent director attended
fewer than 75% of the aggregate of all meetings of the Board and of the
Committees of the Board on which such director served.
Directors' Compensation
Non-employee members of the Board of Directors are compensated by the
Company for board meetings attended in the amount of $1,000 and a quarterly
retainer of $1,500 with the chairman receiving an additional $500 per
quarter. All directors are reimbursed for their reasonable travel
expenses incurred in attending meetings of the Board or any Committee or
otherwise in connection with their service as a director. Additionally,
compensation of $500 is paid to the non-employee directors for each
committee meeting attended.
The Company's 1990 Incentive Plan (the "Plan"), approved at the May
18, 1990 Annual Meeting of Shareholders, provides that each non-employee
director of the Company on the first business date after each Annual
Meeting of Shareholders of the Company, beginning with the 1990 Annual
Meeting of Shareholders, will automatically be granted a non-qualified
option for 2,500 shares of Common Stock under the Plan. Each option so
granted to a non-employee director will have an exercise price per share
equal to the fair market value of the common stock on the date of grant of
such option. Each such option will be fully exercisable at the date of
grant and will expire upon the tenth anniversary of the date of grant. On
May 7, 1997, Messrs. Cresci, Hayes, Lim, Moore, Nicolais, and Paulson were
each granted options to purchase 2,500 shares at the per share exercise
price of $2.75, none of which were exercised during fiscal 1997.
On October 30, 1997, Thomas A. Landshof resigned as President, Chief
Executive Officer and as a Director. The Board of Directors appointed
Bernard A. Paulson, Director, as interim Chief Executive Officer with
compensation of $4,000 per month and $1,000 per day for negotiation of
special projects. Additionally, the Board of Directors retained William B.
Hayes, Chairman, as consultant until the selection of a new President and
Chief Executive Officer, with compensation of $500.00 each day of
consultation.
<PAGE> 5
<PAGE>
Employee directors receive no additional compensation for service on
the Board of Directors or on Committees of the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Officers, directors and greater than ten-percent stockholders are
required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on its review of the copies of
such forms received by it, or written representations from certain
reporting persons, the Company believes that during the fiscal year ended
December 3l, 1997, all filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied
with.
Audit Committee
The Audit Committee held one meeting in conjunction with the full
board during the Company's fiscal year ended December 31, 1997. The Audit
Committee reviews the professional services provided by the Company's
independent auditors and the independence of such auditors from management
of the Company. The Committee also reviews the scope of the examination of
the financial statements by the independent auditors, the annual financial
statements of the Company and such other matters with respect to
accounting, auditing, and financial reporting practices and procedures of
the Company. The Committee is composed of three outside Directors of the
Company: Messrs. Hayes, Lim, and Nicolais (Chairman).
Executive Committee
The Executive Committee's primary responsibilities are to review and
authorize actions required in the management of the business and affairs of
the Company, in instances where it is not practicable to convene the full
Board. Members of the Committee are Messrs. Cresci, Hayes, and Moore
(Chairman). The Committee did not meet during 1997.
Compensation and Incentive Plan Committee
This Committee is composed entirely of disinterested non-employee
directors consisting of Messrs. Cresci, Moore (Chairman), and Paulson. The
Committee met twice in 1997.
The Committee formulates and presents to the Board of Directors
recommendations as to the base salaries for all officers of the Company.
The Committee specifically reviews, approves, and establishes the
compensation for the President and Chief Executive Officer. The Committee
is authorized to select persons to receive awards under the Company's 1990
Incentive Plan, to determine the terms and provisions of the awards, if
any, the amount of the awards, and otherwise administer the Company's 1990
Incentive Plan to the full extent provided in such Plan. Except for the
automatic annual grants to non-employee directors described under
"Directors' Compensation", none of the members of the Committee are
eligible to receive grants under the 1990 Incentive Plan.
<PAGE> 6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning cash
compensation paid by the Company to the President and Chief Executive
Officer of the Company for the year ended December 31, 1997:
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Name and Compensation All Other
Principal Position Year Salary($) Bonus($) Options/SARs(#)(2) Compensation($)
- ------------------ ---- --------- -------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas A. Landshof 1997(5) 117,479 95,540(6)
President and CEO 1996 131,250 29,302(4) -0- 1,988
1995 129,087 21,785(1) 150,000 19,880(3)
</TABLE>
(1) $6,785 earned in fiscal year; deferred to 1996.
(2) In February 1995, Mr. Landshof was granted 150,000 options under the
1990 Incentive Plan at an exercise price of $2.625 exercisable over
three years in increments of 75,000 options, 37,500 options
and 37,500 options, respectively.
(3) Includes reimbursement for relocation and temporary living expenses.
(4) $4,502 earned in fiscal year; deferred to 1997.
(5) Mr. Landshof resigned from the Company on October 30, 1997.
(6) Includes $49,349 severance pay accrued fiscal year; deferred to 1998,
and other benefits.
The following table sets forth information concerning options granted the
Chief Executive Officer of the Company.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at FY- In-the-Money Options/
Shares Acquired End (#) Exercisable/ SARs at FY-End ($)
Name or Exercised(#) Value Realized($) Unexercisable Exercisable/Unexercisable
---- --------------- ----------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas A. Landshof 0 0 0 0
</TABLE>
<PAGE> 7
<PAGE>
Security Ownership of Management
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned by each director and nominee for director
and all directors and executive officers of the Company as a group as of
December 31, 1997.
Amount
Beneficially Percent
Name of Individual or Group Owned (1) of Class
--------------------------- ------------ --------
Robert J. Cresci 1,225,486(2)(3) 20.8%
William B. Hayes 72,000(4) 1.5%
Keng Kay Lim 1,355,500(5) 29.1%
Kevin S. Moore 1,174,780(6)(7) 24.9%
Michael A. Nicolais 30,000(8) <1%
Bernard A. Paulson 25,000(7) <1%
All directors and executive officers
as a group (8 persons) 3,906,266(9) 64.8%
(1) Unless otherwise indicated, each person has sole voting and investment
power over the shares indicated.
(2) Includes 847,778 shares issuable upon the exercise of warrants held by
NAP & Co., 199,107 shares issuable upon the exercise of warrants held by
Northman & Co., and 164,226 shares issuable upon the exercise of
warrants held by Fuelship & Co., of which Mr. Cresci exercises sole
voting power as Managing Director of Pecks Management Partners, Ltd.
(3) Includes options to acquire 14,375 shares that are subject to stock
options that are exercisable at or within sixty days of the Record
Date.
(4) Consists of 70,000 shares that are subject to stock options that are
exercisable at or within sixty days of the Record Date.
(5) Consists of 2,500 shares that are subject to stock options that are
exercisable at or within sixty days of the Record Date and
1,353,000 shares held by Megamin Ventures Sdn Bhd, a Malaysian
corporation, of which Mr. Lim has controlling interest and exercises
sole voting power.
<PAGE> 8
<PAGE>
(6) Includes 1,159,780 shares held by the Clark family including Jane
Forbes Clark who owns 459,602 shares and Anne L. Peretz who owns
448,825 shares that may be deemed to be beneficially owned by Mr. Moore
in accordance with Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended. Mr. Moore, Senior Vice President of The Clark
Estates, Inc., has been granted powers of attorney to exercise voting
and investment power as to these 1,159,780 shares. The Clark Estates,
Inc. and Mr. Moore have shared voting and investment power as to
1,159,780 shares; Jane Forbes Clark has shared voting and investment
power as to 459,602 shares; Anne L. Peretz has shared voting and
investment power as to 448,825 shares.
(7) Includes 15,000 shares that are subject to stock options that are
exercisable at or within sixty days of the Record Date.
(8) Includes 20,000 shares that are subject to stock options that are
exercisable at or within sixty days of the Record Date.
(9) Includes 157,475 shares which officers and directors as a group have
the right to acquire pursuant to stock options and 1,211,111 shares
that the entities named in number (2) above have the right to acquire
pursuant to warrants which are exercisable at or within sixty days of
the Record Date.
CERTAIN TRANSACTIONS
On October 30, 1997, Thomas A. Landshof resigned as President and
Chief Executive Officer and as a Director. Mr. Landshof was provided with
six months of severance pay at his current base compensation.
Following the completion of the sale of 1 million shares of Common
Stock to Megamin Ventures Sdn Bhd, the Company in February 1997 elected
Keng Kay Lim to the Company's Board of Directors, and Keng Kay Lim has been
nominated for re-election at the Annual Meeting to serve as a director for
a term ending at the 1998 Annual Meeting. Mr. Lim, through Megamin
Ventures Sdn Bhd, is also the controlling shareholder of Malaysian Titanium
Corporation Sdn Bhd ("MTC"), the Company's principal raw materials
supplier. During 1995, 1996, and 1997 the Company paid MTC $2,964,00,
$4,266,250, and $4,077,400 respectively, for raw materials (principally
synthetic rutile), under a supply contract that extends through 1999, and
will purchase raw materials from MTC in 1998.
<PAGE> 9
<PAGE>
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
YEAR ENDING DECEMBER 31, 1998
Upon the recommendation of the Audit Committee, the Board of Directors
has approved the retention of Ernst & Young LLP, certified public
accountants, to serve as independent auditors to audit the accounts of the
Company for the year ending December 31, 1998, subject to ratification of
such approval by the Company's stockholders. Ernst & Young LLP served as
independent auditors for the Company for the year ended December 31, 1997.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting to be held in May, 1999 must be received by the Secretary of the
Company at its principal executive offices at 722 Burleson Street (P. O.
Box 2544), Corpus Christi, TX 78403 for inclusion in the proxy statement
and form of proxy relating to that meeting no later than December 1, 1998.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote the
proxy as in their discretion they may deem appropriate, unless directed in
the proxy to do otherwise.
<PAGE> 10
<PAGE>
